What is business process? Definition and real life examples!
A business process or business method is a collection of related, structured activities or tasks by people or equipment which in a specific sequence produce a service or product (serves a particular business goal) for a particular customer or customers. This is a definition based on Wikipedia. In human language, business process is like an assembly line – it takes all the inputs in various stages and creates a fully serviceable finished product.
Essentially anything that happens within your company that has a clearly defined start and finish can be considered a business process. Do you remember the hassle you went through when applying for a job at your (dream) employer? You have been a part of an HR business process that began with your application and resulted in the on-boarding week! How about that invoice that your customer receives after he made a purchase with your company? This is your typical order-to-cash process.
Since each business process is unique, so will be its inputs that need to be fulfilled in (ideally) predefined and standardized scenarios and outputs that result in different goals. Factors that directly or indirectly contribute to your process can have a major impact on it and therefore should be pinpointed and inspected accordingly. For that we have a solution – process mining!
But before jumping in business process mining, let’s take a step back first.
Business process history
To explain the meaning of the business process, you must dig quite a bit in the history. When you do that, you might discover a mention about a man named Adam Smith and his quote from year 1827 mentioned in his book “An Inquiry into the Nature and Causes of the Wealth of Nations”:
“One man draws out the wire; another straights it; a third cuts it; a fourth points it; a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business; to whiten the pins is another ... and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them.”
Fast forward into year 1993 and to the book “Process Innovation: Reengineering work through information technology” by Thomas Davenport. There you will read the following:
“Business process is a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. ... Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers.”
What to make out of these two (and numerous others) definitions? That the term of business process is very broad. Virtually any result-producing-action conducted by your organization is a business process. It doesn’t matter how big or small your company is or what it produces, however, it is safe to say that it reflects an established business process.
What are the key components of a business process?
For your own convenience, we encapsulated all the essential components of a business process in 8 key components. For business process to be functional and sustainable, it must be in accordance with the following prerequisites:
- Have clearly defined boundaries – you must know what goes in and what should come out
- Determine your structure – in an ideal scenario any business process should follow a clear order
- Know your customer – if you follow a business process, you must know who is at the receiving end and serve him
- Bring evident value – if you serve your customers using business processes, it must bring them value and make their life easier
- Let the process become a part of your organization – your organization cannot live without your process and vice versa
- Make your process universal – if you plan thoroughly, one process can serve not one, but multiple different customers
- Avoid silos at all cost – you don’t want your backend developers to follow a process that only they know and can explain
- Identify the process owner – someone must oversee the project and take full responsibility for its performance and improvement
In the next section, we will dissect the business processes into three major categories.
Business process categories and examples
Due to the nature of the business processes, it is quite possible to break up them into couple of distinct types, some will be vital for your core business, others will support it.
Operational processes, also called the core business processes, are the activities that bring direct value to your company and your customers. Such processes are absolutely essential to your company and its perfection is crucial because they are generating your revenue.
Examples of operational processes:
- order to cash process
- manufacturing of the products
- robot process automation (RPA)
- delivery of the products
To be able to only focus on core business, activities must be every business owner’s dream. As your organization grows, so do its business processes. In the real world, for every employee that focuses on core business and creates the value that consumers crave there are multiple workers that are not necessarily responsible for the final product but are helping to smooth the whole process. Without them, even the best organizations would collapse.
Examples of supporting processes:
- technical support
- call center
- marketing funnels
Without these people and their respective processes, there is no future for any company.
Somebody needs to oversee how the company runs. The managers surely have their set of rules and processes which their follow.
Their main task is to measure, monitor and control all the business-related procedures and systems.
Examples of management processes:
- governance (to oblige with the legal regulations and internal guidelines)
The importance of the business processes
To say that your organization should rely on a frictionless execution of the business processes would be an understatement. Each business process within an organization is a constantly evolving mechanism that dictates the future success of the company. Should you fail to acknowledge its importance, your competition might get an edge over you.
Hence, it should come as no surprise that organizations’ priorities should be constant improvements of their business processes to make them as efficient as possible.
A wise man once said:
“If you can’t measure it, you can’t manage it”.
The man was named Peter Drucker who laid down some of the essential foundations of the modern business corporation.
For every manager or executive to be informed and make fact-based decisions with the goal to improve the company’s internal procedures, the process performance needs to be measured. Since great share of all the business processes are either automatic or at least fully digital, it means one thing – the processes are producing a digital footprints and it is up to your organization to capitalize on the data you collect.
This is how you can make the best use of process mining techniques.
With process mining you can restructure your business’ computer-based processes and visualize them as-is sequences that reflect how well your business process performs and whether it conforms to the expectations.
Process mining as an essential base for process reporting
Because business processes must come with up-to-date and accurate reports to ensure effective, goal-oriented action, process mining is a go-to solution.
Process mining helps you with restructuring the business process, but it doesn’t end there. You can set up vital KPIs (Key performance indicators) to measure the effectivity or find the bottlenecks in the process. If you are interested in more topics on how the process mining can help you and your organization, you can explore more in our latest article on the topic!
If you are afraid that your process might get messy and out of hand, don’t worry. In the process mining community, we like to say – the more activities the better. Modern process mining tools such as Celonis are made for big data and you can feed them with essentially anything! The bigger the better!
Business process is only the beginning
At this point, there is a million subsequent topics to cover that are relevant for business processes. For starters, it would be a very good question how to optimize such processes and how to measure it against internal company benchmarks – that would lead you to KPI management.
Next big thing is a business process reengineering which is nothing more than redesigning your processes into easy to understand workflows.
Last, every business process owner is familiar with conformance checking. When you are checking whether or not the process conforms to your vision, you are essentially asking: “How much my process deviates from preferable scenario?” With Celonis conformance checking you can take process mining to the next level and create a fully integrated and automated target process comparison.
All these terms are extremely interesting and relate to rather deep topics, and, in our Process& blog, we will pay close attention to each of them in the near future. Therefore, stay tuned!
Should you have any question regarding your business process and whether you should consider implementing it using the process mining techniques, do not hesitate to contact us through our form! Our data scientist will be pleased to answer you all questions!